If you did a valuation at the end of last year—and you did it the same way you did it in the years prior to the current recession, “you came up with a very, very wrong number,” says John Barton, chair of the American Society of Appraisers (ASA) BV Committee.
The impact of traumatic economic crisis provided unusual motivation in the ASA’s regular effort to update their BV curriculum (which they try to do every five years). “Variables that drive practitioners’ judgments were going off the charts,” Barton says, in an interview with John Borrowman (Borrowman Baker LLP) for his latest online newsletter. “If practitioners just grab the risk-free rate or the equity risk premium and makes assumptions about beta and so forth, they could be coming up with a very wrong number.” So, revisions to the ASA’s BV 201 through 204 guarantee case studies and more advanced lessons in DLOM, volatility in cost of capital determinations, issues in pass-through taxation, valuing intangibles, and international cost of capital.
Barton observes that the basic body of knowledge for the BV professional doesn’t change, but the world in which that knowledge gets applied does. The improved ASA courses strive to stay current.
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